and i hope there are no consequences. well, that's it for this edition of "reliable sources." i'm howard kurtz. join us next sunday morning 11:00 a.m. eastern for another critical look at the media. "state of the union" with candy crowley begins right now. a week of a lot of heat inside a lot of meetings which produced no debt deal. today, dodging default with white house bum et director jacob liu and republican senator lindsey graham. then rudy giuliani on the president, the republican field, and gay marriage. >> i don't know what the heck the republican party wants to do getting involved in people's sexual lives and personal lives so much for. stay out-it. >> and the politics of red ink with former biden chief of staff ron klain and former congressman

tom davis. i'm candy crowley. and this is "state of the union." the president said he wanted a deal by friday so lawmakers met with him at the white house day after day after day. they took a break friday, and the president pushed again. >> if washington operates as usual and can't get anything done, let's at least avert armageddon. >> joining me now, white house budget director jacob liu. thanks for being here this morning. >> good to be with you, candy. >> we are told by hill sources that since the last white house meeting on thursday and this morning there has been no progress. do you concur? >> i think quite a bit has been going on since the meeting at the white house on thursday night. >> there's been activity. has there been progress? >> there's been activity and progress i think on two fronts. first, there are substantial discussions going on in the senate between the two leaders to make sure that at a minimum congress has a way to take action and avoid default on the

u.s. debt. it's critical. we don't think it's enough. we think that the president has said clearly we should do as much as we can to reduce the deficit. but we have to avoid kind of chaos that would result from default. >> you're talking about the mcconnell/reid -- >> correct. >> -- way out of not having a -- it cuts $1.5 trillion and then the deficit. >> my understanding is what they're working on right now would provide a mechanism for extending the debt and provide for a joint committee of congress to take action on the deficit. the president's made clear that we need to do more than that. we need to get as much done to reduce the deficit now and the time to act is now. i think in addition to that there have been a lot of conversations going on amongst parties. the president at the end of the meeting on thursday said that each leader should go back to their caucus, they should talk to each other, be back and ft. worth the administration. that's been going on since thursday. >> so you've been talking to folks, as well, about the grand deal and the medium deal and d -- >> a there have been a lot of

conversations. >> right. >> they'll continue. >> again, conversations aren't exactly progress. so where do you think you've made progress? >>, you know, i think it's not insignificant that all the leaders understand that it would be irresponse to believe get to august 2nd and not extend the ability of the united states to pay its obligations. >> do members of congress understand that? >> i think that as we approach it more and more seem to be coming to it. there will be a fringe that believes that playing with armageddon is a good idea. but i don't think that's where the majority will be. >> any white house meetings today with any of the principals? >> you know, i haven't been to the office yet this morning. i think i'll find out when i get there. >> when you get there. okay. so you seem fairly confident that at the very least there will not be default on the 2nd. >> i have confidence that ultimately the responsible leadership in washington will not fail to take an action, where failure would mean interest rates that would amount to a tax on all americans when they buy a home or a car, they

would undermine our recovery. they would create chaos in the u.s. and the world economy. i'm confident that the responsible leaders of congress know that that is not an option. >> more immediately, you'd have to make some spending priorities, payment priority decisions -- social security benefits, federal worker pay, defense contractors. what are your priorities should you not have the debt ceiling raised on the 2nd when you had these bills that sort of immediately become due? social security checks, federal worker pay, defense contractors. >> our plan is for the congress to do its work if the president signed into law legislation that would make it possible for the united states, as it always has, to keep its obligations. we'll be ready to deal with whatever happens. but there is no plan other than meeting our obligations. >> surely you must have discussed priorities, though -- we have to pay this. >> well, the truth is that this is a different situation than the united states has ever faced. we've never gone into a

situation where we didn't have enough money to pay our bills. we borrowed 40 cents on a dollar right now. if the time comes when we lose the ability to pay our bills, there will be a cash-flow issue that is very real. and that's why it's critical that congress take action before august 2nd. >> would you actually allow it to happen, that those social security checks would not go out? would you allow that to happen? >> as the president has indicated, it's not a question of what we allow and don't. >> but you get to decide priorities. there will be some money -- >> there won't be enough money to pay all the bills. >> of course not. that's why i'm talking about priorities. >> i think once one gets into the business of trying to ask about setting priorities it misses the the fundamental question, which is that it's unacceptable for the united states to be in a place where, whether it's social security recipient or a soldier or somebody who is just owed money by the government, can't be paid because we have not done our job. >> let me play something, talking act everything on the table. one of the things as you know that some republicans are

pushing is a balanced budget amendment, constitutional amendment to require a balanced budget under certain circumstances. here's what the president had to say the other day. >> i think it's important for everybody to understand that all of us believe we need to get to a point where eventually we can balance the budget. we don't need a constitutional amendment to do that. >> but apparently you do need something to do that, because we're facing a meltdown, you all keep saying, and yet there isn't a deal. and yet we don't have a deal that will raise the debt and forgo a meltdown. what is so wrong with a balanced budget amendment? >> well, just to be clear -- and as the president has said a number of times this week, if not now, when? congress needs to act. it is a question of will. there's plenty of time to make decisions now. >> but the balanced budget -- >> what these ideas do is say let's kick the cans down the road so others will deal with it. the challenge is for washington now do the job the american people sent us here to do.

the forum that this constitutional amendment takes is is quite draconian. what these amendments do is not just say you have to balance the budget but it puts in place spending limitations that would force us to cut social security and medicare more deeply than even the house budget resolution. that's not what the american people want. >> what about the balanced budget amendment? >> i think the principle that should be governing right now is that congress do the job that it was sent here to do. the president wants to work with congress. he's shown a willingness to move substantially. we need a partner to work with. we need to get the job done. we need to get the job done now and do as much as we can do. the whole world is watching. this is not just a question of washington politics. the u.s. credit rating is at stake. our place in the world is at stake. we need to act now. >> the debt most needs is a growing economy. and in that nature i want to read you something. our source here is reuters. this is from a goldman sachs report that went out last night.

>> this is higher unemployment and lower growth than you all were predibbing. what that means of course is that you can't make a substantial effort towards the debt, as opposed to the deficit, with growth that low, can you? >> look, it has been a difficult few weeks in the economy. there have been some external factors from the nuclear accident in japan to other things that made growth slower. >> sure. >> and there's still a consensus that we will return to growth, but it's not enough growth, and the president's made clear we need to stay focused on growing the economy and creating jobs. >> do you agree that growth is

going to be lower than you all thought? i think it's clear that the recent weeks have been slower than have been expected. we're still confident, as are most forecasters, that we will return to growth and that we'll remain a growing economy. but the challenge is -- >> more than you had hoped, though, now looking a it? >> there are a lot of things we could do now that make a difference. we've done quite a lot in the first two years with the recovery act. the president and congress took action without which we'd have millions more people out of work. we have pending proposals on the hill which would do a lot, grow the economy and create jobs. congress should pass the trade agreements that are up there, pass patent reform. the president's made clear that we need to take a look at extending the payroll tax deduction. the average american family has a thousand dollars in their pocket. there are things we can do and we need to work together to get done. >> thank you so much. officer of manager and budget, we appreciate your time. go to the white house. let us know what's going on. we appreciate it. >> thanks, candy. up next, one republican who says his party should consider

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joining me now from clemson, south carolina, republican senator lindsey graham. senator, thanks for joining us. i think you just heard the director of the office of management and budget saying that he believes that more and more republicans are beginning to understand that default, while an option, is a calamitous option and certainly an onerous option. do you see any kind of coming together of republicans around a way that will avoid default? >> absolutely. i think the house will pass next week, cut, cap, and balance. it does three things. it will take the government spending at the near term back to around 2008 spending levels. it will have a cap on spending over the next decade to make sure we wipe out the debts in a ten-year period, and it will require the passage of a balanced budget amendment out of the congress. and for those three things we'll

raise the debt limit. that will be the republican position in the house almost unanimously. i think it will be the republican position in the senate. i would urge every democrat to get in the room and help us craft a -- >> but you can't pass that in the senate. >> there will never be a balanced -- i think so. well, let me just say this. what's calamitous is the track we're on as a nation we're becoming greece. we're borrowing 40 cents of every dollar. we have $53 trillion of unfunded liability. a child born today has $46,000 of debt. so now's the time to do real things that matter. 49 states have things that balance their budget. neither party will balance the budget unless there's some discipline in the system, and the system that will bring discipline is a balanced budget of the constitution which i think will be ratified in a couple years. >> but i must say the jacob lew

just told us that the conditions on this balanced budget amendment would require huge cuts in medicare and in social security. they have a majority, the democrats have a majority in the senate. this does not at this moment in its current form sound to me like something that will pass in the senate, then what? >> well, we will negotiate the number of gdp spending is 18%. the balanced budget amendment in the house is going to limit spending to 18% of gdp, which is the 40-year average. but that is subject to being negotiated with republicans and democrats. the super majority to raise taxes is is subject to be negotiated. i don't think what's subject to being negotiated is the idea of avoiding a balanced budget amendment. when the president said we don't need one, candy, what rational person can look at the congress over the last 40 years? graham, rudman, hollins, simpson, bowles. there is no plan going to

achieve balance in congress unless the constitution is changed to make us to do it. so i am very willing to raise the debt limit -- >> what happens if you -- let's just say somehow that there is a balanced budget and huge things happen. katrina happens. tornadoes run through all of the midwest. >> right. >> then we start a war and you've got a balanced budget amendment. what happens? >> you can waive the provisions by two-thirds vote of the senate. so if there is a major war or we get attacked, another 9/11, we have a very cataclysmic event that affects our economy either internally or extermly. we can waive that requirement. 49 states have this requirement. candy, i don't see how anybody who's been in politics as long as i have can look the people in the eye and say that within the body we're going to find a way to do this. every two years we jockey for the next election. we never make long, hard term decisions. the big deal they're talking about cutting spending over the next ten years still adds $6

trillion to the debt so the real deal to limit spending and get us in balance would be an amendment to our constitution. without that, we're just going to talk to each other and run america into the ground. >> let me ask you about the so-called mcconnell/reid plan, which is not, as i understand it, completely put together yet. but it would allow the president to to raise the debt ceiling in three increments between now and the end of next year, perhaps with some spending cuts attached. as a last resort, would you vote for that in order to avoid the -- >> i'm sticking with the -- i don't have any confidence that anything that republican or democratic leaders is going to lead to the solutions that we need. it never has in the past. i'm looking for a win/win. i'm looking for a way to raise the debt ceiling and we need to, but we need to address fundamentally what got us into debt. cut, cap, and balance gets us

out of debt over a long period of time. we'll have a balanced budget amendment requirement to to stay out of debt. i think that's going to be the republican position. to me it is a sound position. >> it's a position but is it a solution? i mean, i think -- >> i think so. it's the only solution. >> well, it just doesn't -- honestly, it's been out there for a while. we have heard of the cut, cap, and balance. it has not caught steam in the democratic side. you all are staring down the face of this default and say, well, this is our position. as the white house says, here's our position. where is the give. you at one point said you might go for some revenue increases. do you still stand by that? >> yeah. here's what would happen if we had a requirement to balance the budget. both parties would have to do it. there would be no excuses. you would have to do something about entitlement spending. it's 57% of all spending of medicare or social security and

medicaid, would have to address that in a bipartisan fashion, would have to make some hard decisions. and i would be willing to close loopholes like the ethanol subsidy. i would be willing to eliminate that, take some of the money to pay down tax rates to create jobs and some of the money to go to retiring the debt. i'd be willing to close loopholes and put some of the money on debt retirement, but i will only do that in the context of a serious plan to balance the budget. >> okay. >> and i have been here since 1995. and i know what's going to happen. if we pass the balanced budget amendment of the constitution, it would get ratified by the states and we would get this country back on track. and if we done do that, we're just kicking the can down the road. >> if i could get a yes or no here, because we're running out of time, if you cannot -- >> sure. >> -- get the senate to what is what the house surely will this week, you will allow the u.s. to go in default or you will go to a plan b. which? >> i'm going to focus on plan a. that to me is the only plan that will work.

it's the real deal, not a big deal. >> well, if it helps at all, the white house isn't budging either. it's just hard to know how you all are going to come to any kind of agreement. senator lindsey graham, thanks for joining us this morning. >> thank you. up next, why rudy giuliani is considering another run for president. >> i think that i probably have the best record in terms of having done something similar to what the country needs done right now. candy? um-- well, you know, you're in luck. we're experts in this sort of thing, mortgage rigamarole, whatnot. why don't we get a contract? who wants a contract? [honks horn] [circus music plays] here you go, pete. thanks, betty. betty: we're out of toner. announcer: if you're facing foreclosure, talk to the right people. speak with hud-approved housing counselors free of charge at...

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in the republican presidential field, we've got a handful of not quite candidates conducting uncampaigns, which is sometimes a prelude to a real campaign and sometimes just an interesting activity or maybe a way to drive up speaking fees. rudy julia thisny is one of the not quits. when he launched his first presidential bid in 2008, the former new york mayor went right to the top of the polls.

but early results were disappointing, putting it mildly, and he dropped out after the first few primaries. he is no early bird this time around. the man who gained national prominence and accolades for his in your face, take-charge approach during 9/11, is patient now on this new journey, shaking hands, listening, holding private meetings in new hampshire. he says he'll decide by september. whether it's his new approach or the familiarity of his name, giuliani is doing all right in new hampshire. currently third in a recent american research group poll behind mitt romney and michele bachmann. i caught up with rudy giuliani at a harley-davidson dealership in new hampshire. as well as they should.t dk sometimes, i worry my pipes might leak. but i learned there's something more i can do. now, i take care with vesicare. once-daily vesicare can help control your bladder muscle and is proven to treat overactive bladder with symptoms of frequent urges and leaks day and night.

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[ male announcer ] time to check your air conditioning? come to meineke now and get a free ac system check and a free cooler with paid ac service. meineke. we have the coolest customers. mr. mayor, thank you for joining us. >> thank you, candy. >> here in new hampshire. interesting spot to meet up with you. >> great setting. >> you have said that you will begin if you were convinced you had the best chance to beat barack obama. >> mm-hmm. mm-hmm. >> let me try to get into your thought process about this. >> sure. >> if there is one. >> i'm not sure how much there is, but we'll find out. >> why, for instance, would you be better than mitt romney? >> well, i can tell you why i think i would have certain

strengths. i think i probably have the best record in terms of having done something similar to what the country needs done right now. i look at the other candidates. they've all done some very impressive things, but none of them really had to take over city, one of the largest economies in the country, one of the most complex, when it was in terrible trouble, and turn it around, have definable results that i can point to. it isn't just saying it or believing it or thinking it, i can show we started with 10% unemployment, got it down to 5%. we started with 1.1 million welfare and got it down to 500,000. this is what the country needs right now. >> the best person to beat president obama.

>> i think that to look at it as objectively as he can, the economy is in very, very difficult condition. it's been that way for a long time. president obama has presided over the longest string of very high unemployment since the great depression and hasn't really done much about it, promised to do things about it, said the things he did would bring unemployment down like the tremendous stimulus or tremendous trillion-dollar stimulus to get us close to 7% unemployment. we're at 9% unemployment. these are horrendous results. these are about as bad as any american president has had since the depression. >> you had people like mitt romney, tim pawlenty, john huntsman, they've all governed states, all have a record they're running on saying i helped with unemployment, this kind of thing. i'm just trying to figure why -- you're trying to decide whether you've got a better chance to beat president obama, and i'm

trying to decide why you would think, given that they also have records. >> they do. they have records and impressive records, but i don't remember their states being in the kind of condition new york city was in. i got elected on a campaign theme. you can't do any worse because we were in such bad shape. and we were the crime capital of america. we were supposed to be in inevitable decline, we would never come back again. "time" magazine wrote an article saying new york's best days are behind it. reminds me of what they're writing about the country right now. and we turned that around. so when i look at that as objectively as you ever can about yourself as you can in a situation, seems to be that is roughly where the country is right now. >> you sound on this question, do i have a better shot at it, you sound like you've made up your mind. >>, no i haven't. i haven't. i've been here now about six times this year, about eight

times last year so, i really know new hampshire. trying to figure out what kind of chance i would have here. then of course you have to go a little further than here. you have to win a few more after this even if you can win this one, i'm not sure i can. probably by the end of the summer at some point like that i'll be able to figure it all out. >> is there anyone in the field right now that you could not campaign for should you decide not to run? >> i don't think so. i mean, they haven't all laid out their case yet so i don't really have a sense of who the best ones are yet. but i don't think -- look, i'm going to campaign for a republican candidate for president, whether it's one of the people in the field, myself, or maybe somebody new that comes into the field of which there are one or two that are pretty impressive. >> and who's that that impresses you that's not in yet? >> who's not in yet? rick perry is not in yet. ri rick's got a great record, probably one of the strongest records of any governor in america, one of the longest

running governorships. rick is a good friend, so rick would be -- >> talking to your fund-raiser, by the way, next week. >> oh, gosh. my fund-raisers during the campaign contributed to me, to john mccain. last time i had a lot of help from john mccain, which was part of the problem, also. then john just beat us. >> mr. mayor, let me ask you to stand by. when we come back, we want to talk a little bit about those debt ceilings talks. i'm breathing better so now i can take the lead on a science adventure. advair is clinically proven to help significantly improve lung function. unlike most copd medications, advair contains both an anti-inflammatory and a long-acting bronchodilator, working together to help improve your lung function all day. advair won't replace fast-acting inhalers for sudden symptoms and should not be used more than twice a day. people with copd taking advair may have

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once again with former new york mayor rudy julgiuliani. thank you for being here. i wonder if you worry politically that the republican party, from what you're looking and watching in washington with the debt ceiling, is losing the political edge here. you think politically they're beginning to lose this battle with the president? >> no. no, no. i think the battle -- and who's going to win it or who loses is still up for grabs and it's hard to know. i'm sort of disappointed that it's come down to that. i mean, it shouldn't be about does the president win, does do the republicans win. >> but it's washington. >> this is too big -- this is

too big -- this is too big an issue to play chicken with. >> and you have said that you think the debt ceiling has to be raised? >> america shouldn't default. and i sympathize with the people who say secretary geithner could be exaggerating. but i sure as heck don't want to test that, and i can tell you one thing, there's nothing good about defaulting. that isn't a good thing to do, particularly for those of us who are conservative republicans who have a great deal of sense that, you know, you've got to have a balanced budget, you've got to pay your debts, you've got to kind of work these things out, you can compromise somewhat but you can't compromise too much. so i hope -- >> if you were sitting at the table, would you say, yeah, i'll agree to closing loopholes on oil and gas companies for 1.5 or 2.5 or any amount of spending? >> i wouldn't do tax increases as a way to compromise. >> none. >> if we compromise, let's

compromise about spending decreases and the extent of them because we would like to go a lot further than the democrats would go, and i think there's area for negotiation there. i would not raise taxes -- >> even if that meant putting the country in default in this game of chick than you said? >> no. >> is that meant putting the country in default psh. >> i think raising taxes would be a disaster for our economy right now. we should be slashing our corporate tax in half. it's ridiculous. we have the highest korp tax in the world, and we complain about money going overseas. why does money go overseas? because the tax rates are half what they are in the united states, and we're still stupid enough to keep it 35% ceiling on our tax increase and kind of sell it to the public going, oh, gee, let's tax the rich. what we're doing is sure we're taxing the rich, but we're taxing ourselves out of jobs. >> somebody's going to have to blink here. >> and i honestly think that's where the compromise will be. i think the president understands there are two realities you have to come up with against. there's a republican house of

representatives and the republicans don't have control. the president cannot ask the 85 new members of congress who were elected on a solemn promise they're not going to raise taxes to raise taxes. >> well, he can. >> you can't. >> if you were -- >> but then he's not a good president. in order to get somebody to compromise, you have to got to figure out how to get them to do something that isn't going to commit suicide. if they had agreed to a tax increase, they're committing political suicide. you don't ask someone to shoot themselves. on the other hand, the republicans can't ask for the massive reductions that they'd like to get or maybe even, you know, an agreement to a balanced budget amendment, even though i'd like to see a balanced budget agreement, they don't control the entire government, not the senate or the presidency. both sides have to have the maturity and wisdom to figure out what's a deal where we give but we don't ask the other guy to commit society?

we don't want -- the president can't be asked to do that and the republicans can't be asked to do that. you never make a deal that way. >> let's move along. osama bin laden is dead. we are told by any number of sources that the number of al qaeda in afghanistan is down to a handful, perhaps two dozen or so. there are those in the presidential race who say, look, we can get out a lot quicker even than president obama thinks we can. is our mission done in afghanistan? >> no. no. >> why not? you have to folk ds sh. >> our mission is not done in -- our mission in afghanistan was not just to capture and bring bin laden to justice, although that was a big part of it, and i commend president bush and particularly president obama for having carried it out. i thought that was one of the high points of his presidency for which he will always get credit historically, whether he wins or loses re-election. it's a gutsy decision and the president carried it out 100%. but our mission in afghanistan is to basically end al qaeda and get the taliban under control so it doesn't go back to what it

was in the past and to create a stability there so they don't threaten us in the future. so that doesn't become again the breeding ground for a tax on america the way it was in 2001. we're not there yet. afghanistan is a state of chaos and confusion, not in a state where we can honestly say in good conscience that we've put it in a situation where we don't need to be there in order to protect ourself. and here's what i think has been a big lack of leadership. somebody's got to explain to the american people that we need to be in that region of the world for the indefinite future. without time limits. far more effective would be you put in the truth, you don't tell anybody when you're going to leave. we leave when he accomplish our objective. >> a final domestic question. in the next couple weeks the first same-sex marriages will take place legally in new york. you have always said that you were for civil unions but that you thought marriage was between a man and a woman. >> and i still believe that. i think that marriage should be

between a man and a woman, but i think that the republican party would be well advised to get the heck out of people's bedrooms and let these things get decided by states. and the reality is that this is something that, you know, new york decided by a democratic vote. i think it's wrong, but there are other things that i think are wrong and get decided by democratic vote. >> you can live with it. it's fine. you don't see any harm that's going to come to new york. >> i don't see harm, although i think it would be better for stability of families and everything else if we kept marriage between a man and a woman. i see more harm, however, by dwelling so much on the subject of gays and lesbians and whether it's right or wrong in politics. i think we got far -- not necessarily more important things but far more relevant things to talk about to what government should be talking about. >> move on. >> how to deal with the budget, deal with afghanistan. the things you and i should be talking about. that's what we should be talking about. the rest of it, if you're a

libertarian republican or you have a streak of libertarian republican, i don't know what the heck the republican party wants to do getting involved in people's sexual and personal lives so much. stay out of it. we'd be a much more successful political party if we stuck to our economic conservative roots and our idea of a strong assertive america that is not embarrassed to be the leader of the world. >> mr. mayor, thank you for spending some time with us here in this very unusual -- this is the first time i've ever done an interview in a harley-davidson place, but thank you so much. >> i'm dying to drive one of those things. >> maybe we'll do that later. should i bet yes or no on your getting in? >> betting is illegal in interstate. >> thank you so much. i appreciate your time. >> thank you. >> more with rudy giuliani on our website, including his reflections on the ten-year anniversary of 9/11. go to cnn.com/sotu. up next, president obama's $86 million fund-raising call showed the field of republicans

just how hard it will be to beat him. our political panel is next. let's say you need home and auto insurance. you give us your information once, online... [ whirring and beeping ] [ ding! ] and we give you a discount on both. sort of like two in one. how did you guys think of that? it just came to us. what? bundling and saving made easy. now, that's progressive. call or click today.

joining me now, ron klain, former chief of staff to joe biden and former republican

congressman tom davis. gentlemen, welcome. rudy giuliani we just heard say the republican party would be well advised to get the heck out of i mean's bedrooms and leave gay marriage to the states to decide. i find that remarkable for a guy thinking about running for president. in fact, it made me think he's not running. >> i'm not so sure. i mean, i don't know what he's going to do. but remember this -- new hampshire, south carolina, florida, all these states allow independents to vote in their primary. the attitudes on gay marriage are changing. it's generational at this point. i think a lot of political people think republicans are on the wrong side generationally of this particular issue and doesn't need to be part of the party platform states can decide. >> we're also learning that perhaps rick perry is getting closer and closer to jumping into this race. how does it change the mix? >> well, i think governor perry would be a substantial candidate in the race. but what it shows you is that for mitt romney and sarah palin

and michele bachmann, candidates who have been out there for more than a year testing their message, trying to raise money, there's a great deal of dissatisfaction among their own party in the choices. and so here we are well into the race and people are looking for new republican candidates. that tells you a lot about the field that's out there right now. >> does it really? because i seem to remember, you know, the field, whether you're a democrat or republican, you look at your field and go, oh, they all look like dwarfs and midgets and eventually it grows on you. >> republicans are organized around one thing -- they don't like the direction of the obama administration. after that, they break into a lot of different factions. i think there's no one leader at this point. it will be interesting to see how much money he can raise. iowa is going to be tough to beat bachmann. he'll have to get in and organize. >> perry. >> i'm talking about governor perry. new hampshire will be tough for sledding for him. but if he wants to get in, now is the time. as i said, romney is the leader but it's not overwhelming at this point. that's how a guy like donald trump can get in and move to the

top. at this point, the party is leaderless. >> still looking. >> i'll agree with leaderless. you got me there. >> let me, you know, sort of put up some of the fund-raising numbers that we've seen starting with the president, who, when you put together his $47 million for the re-election and add it to what he's helped the dnc get, $86 million. he has collected more money than the entire republican field put together. what does that tell you? >> it tells you he's got a potent fund-raising machine, has a potent base, he'll be a formidable candidate for re-electi re-election. a lot of the money that comes into these campaigns is outside the parties and the candidates. independent groups are raising more money than parties and candidates at this point and i think there's going to be plenty of money on both sides of this campaign. >> by the way, the last time around democrats went crazy about these independent groups. oh, this is just skirting the law. now, of course, you're putting together the exact same kind of operations so kind of go toe to

toe with republicans. >> you can't unilaterally disarm in politics, unfortunately, and the reality is the rules are the rules and we have to play that way, too. the important point is you saw the president's fund-raising response. it isn't just about the money. it's about hundreds of thousands of grassroots donors. people talk about michele bachmann being the grassroots candidate. the president had ten times as many grassroots donors at michele bachmann. >> new donors. >> and there's still hundreds of thousands, millions more who participate and will be coming in later. what you're seeing here is not just money but tremendous grassroots support for the president in this election. >> let me ask you about the debt ceiling debate. rudy giuliani said no, i don't think the republicans are losing this at all. i think it depends on who the audience is. but nonetheless, who at this point do you think is suffering -- maybe both parties are doing exactly what they want. >> let me make a point. we killed osama bin laden and now that's forgotten. really what's going to matter is

where is the economy a year from now? this debate will be long forgotten next year. we're spending too much time over who wins. we do know if the republicans and democrats don't come together and one party gets unduly blamed and the economy goes into a tailspin, there will be a price to pay. >> let me ask you one thing, just picking up on that. >> sure. >> there's a new goldman sachs report out where it's telling its investors we're lowering what we think the growth rate is going to be in the third and fourth quarter and by the way we think at the end of 2012 is unemployment rate will be no better than 8.7%. okay? that's just no way to win an election, is it? >> i think the question is who's doing more to try to help fix that. look, you look at this debt ceiling thing and the position of the republicans is is just ebs treatment. they're talking about one-sided solutions. you know, when ronald reagan was president, he raised the debt limit 17 times. 11 of those involves revenue increases. now republicans are saying maybe we don't need to do that. we're seeing the the party of

reagan become the party of bachmann, and that is not a winning political strategy in america. >> that's twice we've heard the word "extreme" in two answers and i think we know where the democrats are going. and what is the pushback when the democrats will say, as i'm sure they will, these people held um the u.s. economy trying to protect corporate jet owners and rich people? >> corporate jet owners, i mean, part of that came out of the stimulus package, the cuts -- >> you get what i mean. the whole thing -- >> the republicans are the only ones who have passed a budget. you look at the president's budget, no votes in the senate. senate democrats didn't put a budget forward. at least the republicans have put something up there. you can't score a speech. basically the president said we want to look at all these options, but tangibly he's put nothing forward than -- >> the president has talked about a balanced approach that combines both revenues and big spending cuts. the republicans are digging in here. >> right. but who gets hurt the most if

there is no deal or if there's just a deal to kick the can down the road? >> candy, in the thex week -- look, let's see where this unfolds. at this point, the president's got the bully pulpit, congress is divided. it always gives the president a leg up on this. we saw this in the clinton years. we have another week and a half to play this out. >> i think the president wins because he's the adult saying we need to do something smart, sensible, balanced, reasonable. >> of course john boehner. >> the problem with john boehner is he leaves a caucus that's bad di le sided. he so far hasn't been able to deliver his own followers to follow his position. i think the president, as tom said, he has the bully pulpit, he's commanding the conversation, he's seeming reasonable and balanced. i think that's not only good politics, it's good for our count country. it's what we need to do as a nation to keep the economy growing and to grow the economy. >> and pelosi has also drawn a line in the sand. nancy pelosi has said no cuts to med kashgs medicaid -- >> the republicans sort of saved the democratic divide. in other words, that would have

been a big deal except the republicans said no to taxes. >> these numbers come from safe districts most of them. it makes it hard to compromise. the republicans go back and talk to republicans, democrats to democrats. very little political rekward and compromise. >> in our last 30 seconds, i think john boehner and barack obama have a common goal, and that is people want their leaders to lead. so if boehner wants the house to remain republican, he needs a deal, and if the president wants to go back to the white house, he needs a deal, yes? no? go ahead and agree with me. >> i think the country needs a deal and i hope the republicans get one done. >> history shows when presidents are re-elected, congresses get re-elected. >> thanks so much. up next, our "sound of sunday" -- highlights from the other sunday morning talk shows. then "fareed zakaria: gps." to make science as exciting as a video game. i need to reach peter, who's falling behind. and push janet who's 6 chapters ahead.

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recapping one of today's top stories -- casey anthony walked free from a florida jail shortly after midnight this morning. about a thousand onlookers stood outside the jail watching as she left with her lawyer. anthony was released 12 days after a jury found her not guilty on murder and child neglect charges in the death of her 2-year-old daughter, caylee.

now time for today's "sound of sunday." the mcconnell/reid plan to let the president raise the debt limit three times over the next year unless a veto-proof congress overrules him, has cracked open a republican party divide. >> at the end of the day, republican leaders have made it clear we won't be the ones to put the government into default. >> that would be the mitch mcconnell last-ditch effort? >> mcconnell/reid effort, yes. >> that will be what you agree to if all else fails. >> what's what the senate is doing. the house of representatives has to make a decision about what it will do. at the end of the day, i don't think there will be a default. >> i think the mcconnell plan is more of washington not taking responsibility for -- it's a great political plan. it takes the pressure off all the politicians but allows us to pass a debt limit without making the hard choices that this country has to make. >> the house prepares this week to vote on a bill requiring big spending cuts, mandatory

spending caps, and a balanced budget amendment to the constitution all in advance of an increase in the debt ceiling. one leading conservative supporting that bill predicts mass republican defections on egg anything like the mcconnell/reid bill. >> the mcconnell plan doesn't have 218 republican votes. who knows if there's a combination of rs and ds go for it. but i'm not going to support the mcconnell plan. >> former "news of the world" editor rebekah brooks was arrested today in connection with british police investigations into phone hacking and police bribery. this morning u.s. lawmakers are split on whether this shoib a congressional investigation. >> what's going on in england is startling. to think the extent they went to to break the law to try to report a story. we need to follow through with the fbi investigation and also with congressional investigations. >> we need to let law enforcement work here. congress has got a big issue in front of us. we need to handle our own bune